Business models are based on buying merchandise and services for one price and selling it for another. In the process, they incur spectacular costs marketing to prospective and existing customers, leasing stores, paying employees, buying and maintaining information technology, transporting, and, most importantly, buying and managing the merchandise itself.
Planning, at one level, is a strategic activity. The executives set business objectives and merchandise planners derive strategies to meet them: back to basics to reduce the style count, extended assortments with additional colors and styles, or new lines of business such as health & beauty. On another level, planning is tactical and operational. The plan influences how many styles and colors the retailer will carry. It influences how distributions are planned for stores. It influences when markdowns are expected to be taken for each style and color. It also influences which stores should carry each style.
One of the most important processes of such planning is assortment planning. Assortment planning provides answers to basic questions such as: Which product or service? How much of it? What colors? What sizes? What locations? Who is the target customer? When should it be offered? How long should it be offered? and so forth. Thus, the old adage, the right product, at the right place, at the right time, still holds true in today's retail marketplace, but with one important change. Sellers—whether traditional brick-and-mortar, e-commerce or a combination of the two—must have a compelling selection of merchandise for the right customer as well. Thus, an effective assortment planning process that provides the right products and services at the right locations at the right time is essential for successful modern business operation.
An effective assortment planning process is even more necessary in retail environments and, in particular, fashion retail environments. Retail environments and fashion retail environments often require that the business adjust to relatively fickle needs of the consumer.
Although assortment planning directly affects product selection, price, timing and micro-merchandising, it has often been de-emphasized due to hectic retail schedules. Extinguishing delivery fires and meeting marketing and financial planning obligations use valuable time, forcing companies to take the easy approach to merchandising: repeating assortment breadth and depth from previous seasons, creating store assortments based on store volume, and ranking items by sales volume alone.
Yet, to attract the right customer in today's increasingly competitive environment, assortment planning must focus on creating appropriate product breadth and depth of products based on the customer's desires and shopping patterns, taking into account lifestyles, climates, trends and more. Furthermore, assortment planning must present a compelling mix of products to illustrate the company's strategic vision.
Another important feature that is utilized for determining products to offer for sale at a store is the use of capacity planning. Capacity planning takes into account the available shelf space and floor space of a store, and based on that available space, or capacity, and based on assortment planning information, a precise number of different products can be ordered for a store, so as to be offered for sale at the store. Capacity planning may take into account different types of merchandise and different sales seasons (e.g., spring/summer and fall/winter seasons).
In view of the foregoing, it would be beneficial to provide a method and system that provides efficient implementation of product display based on assortment planning decisions and capacity planning decisions for merchandise to be sold at a store or a plurality of stores.